After accounting for inflation, consumer spending was flat and disposable income climbed 0.2 percent.

"While this could be considered cause for concern, I look for a big rebound in December," said Steve Stanley, economist at RBS Green-wich Capital Markets.

"Auto sales likely posted a rally in December for the third straight year, holiday sales should turn out to be decent if not spectacular, and prices, led by energy, almost certainly are falling," he said.

"November's spending gain, in combination with the strong increase in October, sets us up for a solid holiday sales showing," said Wachovia economist Gina Martin.

For retailers, the November-December period is crucial.

The slowdown in consumer spending appeared to confirm a tepid performance by retailers, who reported a 0.1-percent gain in sales last month.

"The picture is clouded so far by individual retailers and same store sales that have failed to meet expectations but in the aggregate sales are on pace to record a holiday season at least equivalent to last year," Martin said.

In an encouraging sign, US consumer sentiment showed a stronger-than-expected improvement this month, a survey by the University of Michigan showed.

The university's survey-based consumer sentiment index rose to 97.1 this month from 92.8 last month. It was also up from an early-December reading of 95.7.